Despite the fact that Canadian roads are relatively safe, drivers still need to be cautious if they want to protect themselves from collisions.

In Canada, there are approximately 160,000 collisions each year. Every time one of these collisions occurs, drivers must submit a claim to their auto insurance providers. Submitting a claim can be stressful, especially if you’re worried that the accident will encourage your insurance provider to increase your auto premiums.

Thankfully, if you have claim forgiveness, you don’t have to worry about your auto premiums skyrocketing after a collision. If you’re not familiar with this type of coverage and would like to learn more, be sure to continue reading.

What is claim forgiveness?

For those that don’t know, car insurance claim forgiveness (also referred to as accident forgiveness) is a special type of coverage that prevents providers from increasing your rates after your first accident or collision.

However, drivers should know that claim forgiveness is technically a “rider”. A rider is an insurance term for complementary coverage that you add to your policy. This means that riders come at a cost (more on that later).

How does claim forgiveness work in Canada?

If you want to learn how to make the most of your claim forgiveness coverage, then you need to figure out how it works.

As mentioned above, drivers can utilize claim forgiveness after submitting their first claim. If you have claim forgiveness, your provider will essentially “overlook” the accident and allow you to retain your current rates.

Here’s a simple example:

Imagine that you’re driving on a slippery road and need to slow down for a traffic light. As you begin to brake, you slide over a patch of black ice, which causes you to lose control of your vehicle and swerve into on-coming traffic. This results in thousands of dollars worth of damage to your and the other motorists’ vehicles.

After contacting the authorities, you submit a claim to your provider. Because this is the first claim you’ve submitted, your insurance provider will cover the cost of the damage without increasing your auto premium.

Are there instances where claim forgiveness doesn’t apply in Canada?

Yes, there are a handful of situations where you can’t rely on claim forgiveness coverage.

For instance, if you get charged for infringing the Ontario Highway Safety Act (careless driving, racing, etc.), you can’t utilize your claim forgiveness coverage. This is crucial information that drivers should know if they want to make the most out of their claim forgiveness coverage.

Does claim forgiveness erase the incident from your insurance history?

No, claim forgiveness doesn’t remove an accident or collision from your insurance history. Claim forgiveness simply prevents your insurance provider from increasing your premium after your first accident. Because of this, claim forgiveness does not affect your driving or insurance history.

Bonus tip: Are you thinking about switching providers?

Have you recently thought about re-shopping your auto insurance policy? If so, there are a handful of details that you should keep in mind, especially if you’ve recently utilized claim forgiveness.

As mentioned above, claim forgiveness does not remove an incident from your record. Because of this, prospective providers will be able to see that you’ve submitted a claim in the past. In turn, prospective providers may consider this information while determining your rates.

If you’ve used claim forgiveness in the past few years, we suggest staying with your current auto insurance provider, especially if you have a modest premium.

To learn more about how long an accident stays on your insurance record, feel free to click this link.

Do all Canadian drivers qualify for claim forgiveness?

Unfortunately, not all drivers are eligible for claim forgiveness. Insurance providers generally require drivers to accumulate a minimum of six years of accident-free road time before getting access to this specific rider.

Additionally, drivers should know that they can’t obtain claim forgiveness coverage at any time — for the most part, insurance providers will offer this rider to responsible drivers when they’re applying for or renewing their policy.

Who benefits the most from claim forgiveness?

If you have the opportunity, we highly suggest that you obtain claim forgiveness coverage. Even the safest drivers can make mistakes from time to time.

However, there are certain types of drivers that benefit more from claim forgiveness than the average motorist. Claim forgiveness is particularly valuable for the following types of drivers:

• Drivers that have low auto insurance premiums
• Drivers that have never been in an accident
• Luxury vehicle drivers
• Drivers that spend a lot of time on busy highways or in highly populated cities
• Drivers that use their vehicles for work like food delivery workers

Cost vs savings — is claim forgiveness worth it in the long run?

This is one of the most important questions you should ask yourself before investing in this type of coverage.

In our opinion, claim forgiveness is a cost-effective way to ensure that your premiums remain unscathed, even after an accident in which you’re deemed at fault.

Here’s a brief example:

On average, claim forgiveness coverage generally costs about $80 per year in Canada. On the other hand, getting into a collision (resulting in injury or death) causes your premium to increase by about 34%.

If you paid $100 per month prior to a collision, this number would increase to $134 (assuming you don’t have claim forgiveness). After doing some quick calculations, we find that this would increase your annual insurance expenses by about $408 per year.

Although this is a simplistic example, it gives you a general idea of how much money you can save if you have claim forgiveness coverage.

Do you still have questions about claim forgiveness?

As you now know, claim forgiveness is an invaluable rider for Canadian motorists with pristine driving records.

However, we understand that this is a complicated subject.

If you have any questions or concerns about claim forgiveness coverage, don’t hesitate to reach out to your auto insurance advisor. Your insurance advisor can answer any questions you may have and help you take the necessary steps towards being eligible for claim forgiveness coverage in the future.